Lucid Group Reportedly Replaces Head Of Manufacturing

Lucid Group, Inc. (NASDAQ: LCID) has recently replaced its manufacturing chief, Peter Hochholdinger, with another executive, Nicolas Minbiole, according to Business Insider. Mr. Minbiole had been Lucid’s Vice President of Global Quality and now will head up its manufacturing operations and oversee all supplier relationships.

Mr. Hochholdinger is an experienced automotive executive. He worked for 16 years at Audi and served as Tesla’s Vice President of Production before assuming his position at Lucid. It is unclear if he has been assigned a different position at Lucid. 

Lucid’s implementing this management change midway through the key production year of 2022 calls into question whether it will be able to produce 12,000 to 14,000 Lucid Air vehicles in 2022. In late February, Lucid reset its 2022 goal to this range from the 20,000 unit goal it had articulated as recently as mid-November 2021.

The fine print of Lucid’s 1Q 2022 earnings release does appear to equivocate, at least somewhat, on its 2022 production goal. CFO Sherry House said that the 12,000-14,000 range holds “based on the information we have at this point combined with our mitigation plans” for coping with global supply chain challenges and disruptions.

Of course, in order to produce 12,000 to 14,000 vehicles in 2022, equivalent to 1,000+ per month, Lucid would have to increase the pace of manufacturing dramatically. The company delivered just 360 cars to customers in 1Q 2022 and 125 in 4Q 2021.

(in thousands of US $, except for shares outstanding)March 31, 2022December 31, 2021September 30, 2021
Lucid Air Vehicles Delivered3601250
Revenue$57,675 $26,392 $232 
Operating Income($597,530)($485,684)($497,050)
Operating Cash Flow($494,639)($312,733)  (A)
Capital Expenditures($185,082)
Adjusted EBITDA ($383,781)($299,583)($244,962)
Cash – Period End$5,391,844 $6,262,905 $4,796,880 
Debt – Period End$1,998,571 $1,997,057 $7,955 
Shares Outstanding (Millions)1,668 1,648 1,642 
(A) Operating cash flow was negative US$745.4 million in the nine months ended September 30, 2021.

The Lucid management re-shuffle may be linked to the company’s recent recall notice covering 1,117 model year 2022 Lucid Air sedans. According to Lucid, the wiring harness “connected to the instrument panel may not have been secured properly during assembly.” In turn, the speedometer, gear selection indicators, and other gauges and notifications may not update properly.

Given the delivery statistics noted just above, the 1,117 vehicles being recalled may approximately equal the cumulative number of Lucid Airs delivered to customers since the company’s establishment. Positively, no component failures have been reported to date.

Lucid’s uneven transition from conceptualization and development of a unique vehicle to production is far from unusual. Indeed, that is typical for many products which are far less complicated than electric vehicles. Coincidentally, the head of manufacturing engineering at Rivian Automotive, Inc. (NASDAQ: RIVN), another high-profile electric vehicle start-up, appears to have recently been forced out, possibly due to a production shortfall at that company.

The concern for investors in the Lucid management change is that Lucid’ s enterprise value is nearly US$30 billion. At this elevated valuation level, the stock could be affected if the company were to cut 2022 production guidance again.

Lucid Group, Inc. last traded at US$20.14 on the NASDAQ.

Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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